Gulf Arab leaders forged a joint defense pact against external aggression and approved monetary unification in principle at a summit which ended here Sunday. But they rejected moves to speed up a customs union needed to conclude an accord with the EU, according to the six-strong Gulf Cooperation Council (GCC) summit's final declaration.

They also invited the regime of Iraqi President Saddam Hussein to "prove its peaceful intentions towards its neighbors," especially Kuwait, which Baghdad occupied from August 1990 to February 1991.

The declaration called for a "comprehensive dialogue" between Iraq and the United Nations, to examine all pending issues "with a view to a lifting of sanctions" imposed on Iraq a decade ago. The GCC rulers expressed readiness to take part in any humanitarian initiative aimed at easing the "suffering of the brotherly Iraqi people" and to "work for the end of these sufferings in the framework of the UN resolutions."

The rulers of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates also threw their full weight behind the three-month Palestinian intifada, or uprising, against Israeli occupation.

The declaration also assured Abu Dhabi of council support for its "right" to three Gulf islands occupied by Iran in 1971, stressing the "full sovereignty of the UAE over the islands, an integral part of the Emirates." They charged GCC foreign ministers with examining "all possible peaceful ways of allowing the UAE to regain the three islands," which Iran says are historically part of its territory.

The Gulf leaders, who will meet next in Muscat in December 2001, signed a joint defense pact that "commits the GCC member states to defend any member state victim of an external threat or danger." A Gulf official told AFP the pact was "a great step on the road to the establishment of a common defense" between the six monarchies. The pact was to have been signed in November 1999, but GCC defense ministers, then meeting in Dubai, broke up without putting their names to any agreement.

The GCC has approved a $70 million telecommunications project to link the military headquarters of all six countries but has yet to implement the plan, and is also examining a radar network project worth $88 million.

The countries already have a joint defense force called Peninsula Shield, which chiefs of staff last month considered raising the size of from 5,000 to 22,000 troops. The force, created in 1986, is headquartered in Saudi Arabia, but it did not intervene when Iraq overran Kuwait in a few hours in 1990.

The oil-rich Gulf monarchies have signed defense pacts with Western powers and have granted US and British forces military facilities to enforce the embargo and no-fly zone imposed on Iraq.

On the Palestinian issue, the GCC urged the international community to offer "protection to the Palestinian people in the face of Israeli aggression." It expressed "confidence in the Palestinian negotiators" working in the framework of a US-sponsored Mideast peace plan, calling for Israel's withdrawal from all occupied territories.

The GCC, which accounts for 45 percent of the world's oil reserves and provides around 20 percent of the world's crude, also vowed to "take all the necessary measures to ensure (oil) market stability" by backing OPEC production cuts at the cartel's ministerial meeting in Vienna on January 17.

The summit approved the principle of monetary union, which a participant said would begin with linking their respective currencies to the US dollar. All the currencies use the dollar as a reference except the Kuwaiti dinar, which is linked to a basket of half-a-dozen different currencies. No date has been set for the move.

Bahrain's Foreign Minister Sheikh Mohamed Bin Mubarak Al-Khalifa meanwhile told journalists that plans to bring forward a customs union from 2005 to 2003 had been shelved. The union, which would create an economic bloc with imports totaling more than $50 billion a year, is bedeviled by widely varying customs tariffs, from four percent in the UAE to 20 percent in Saudi Arabia.

The EU, the GCC countries' main trading partner, has made a customs union a condition for signing a free trade agreement between the two groups. — (AFP, Riyadh)